Even though the S&P 500 made a new intraday high yesterday there is something funny about the stock market when it comes to corporate earnings. We have now had over two and a half weeks of earnings releases in this reporting period and in aggregate the companies have posted NEGATIVE -0.99% in EPS.
Yes that means earnings as a whole is shrinking for corporate American.
Why is the stock market up then?
Rate cuts and new bond buying programs by the Federal Reserve are helping, but momentum is very important. Higher prices make more people buy and so dos the end of the year calendar.
If you are a traditional investor or smart trader though you want to focus on where the pocket of earnings growth remains – or is accelerating.
Well there is one sector in the market that is posting massive earnings growth and that is the big cap mining stocks. What is happening is that gold prices are so much higher than they were a year ago that it is having a huge impact to the bottom line of mining companies.
This is why two weeks ago Yamana Gold doubled its dividend and gold giant Agnico Eagle increased its dividend by 40% too.
This week we are going to see another group of key mining companies report and analysts are expecting huge earnings growth.
Today Newmont is going to report and analysts are looking for its earnings to double.
Yes double!
Tomorrow Barrick will report with analysts expecting growth of 27% and so will Kirkland Lake gold with expectations for close to 50% growth.
I own all of these stocks and it will be interesting to see these reports this week. I made Kirkland Lake my top stock of the month in July and it has only shown us why it deserved that distinction every single month since.
When I make a stock my pick of the month I also factor in the valuation of the stock and the position it is in on the chart from a risk to reward standpoint.
This is why I made Aftermath Silver my stock pick for November yesterday. For the full post on it go here.
Disclosure: I own position in KL, NEM, AUY, AEM, and GOLD. I also own a position in Aftermath Silver. Because it is a small cap stock with less than $100 million in market cap he is placing himself on a voluntary 30-day trading restriction period from the date of this post in which he will not buy or sell shares of it.
